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CALGARY / VANCOUVER – February 15, 2018: Four years ago, two visionaries began the process of reducing barriers for Canada’s early stage companies accessing growth capital. They each developed unique models to tackle this challenge, working closely with securities regulators and gaining buy-in from the early stage ecosystem. They have now come together to leverage their experience and momentum and help more companies and investors throughout Canada.

One, Sandi Gilbert, developed a suite of technologies that simplified the complexities of capital creation and management with a focus on the angel investing community. The SeedUps platform, and its deal flow app AngelBot, has showcased over 50 companies to its angel network; and DealPoint, a SaaS solution for the private capital markets, has transacted over $4 million in exempt investment since its launch late last year. Next up – a blockchain solution where entrepreneurs and investors can manage their shareholdings post raise.

The other, Peter-Paul Van Hoeken, created FrontFundr, a national Exempt Market Dealer with a proprietary online platform that democratizes Canada’s private capital markets by allowing all Canadians to invest in early stage and growing private companies. FrontFundr has emerged as Canada’s clear leader, having assisted more than 20 companies to raise a combined total of over $8M from a wide range of Canadian investors – not just the 1%. This initiative has unlocked capital across Canada and broadened investor access to a multitude of opportunities.

SeedUps and FrontFundr have now partnered to provide entrepreneurs with a full suite of tools to access the resources and capital they need to grow and scale their businesses. This partnership will help entrepreneurs prepare for and engage with a wide range of new investors; from retail to angels to institutions and investment funds – online and offline. Post investment technologies to help companies and their shareholders better manage their investments will bring transparency to private investing overall.

“Peter-Paul and I have long had similar visions to help entrepreneurs access capital in what we call the ‘funding gap’”, states Gilbert. “By matching our resources with an entrepreneur’s needs, we can increase the probability of a successful outcome for the entrepreneur and its investors”.

“This partnership supports our joint mission to truly democratize investing in private companies in Canada. We are bringing together professional venture capital and everyday Canadians to invest in companies that they believe in” says Van Hoeken.

Entrepreneurs are an essential contributor to the Canadian economy, with small business representing over 98% of businesses in Canada. New models of support and access to capital are critical for Canada’s growth.

Interested in exploring investment opportunities for all Canadians, visit FrontFundr.

If you are a growing company preparing to capital raise, visit SeedUps Canada.

2017 brought new opportunities to Canada’s early stage companies and the investors looking to support the space. Entrepreneurs have more and more opportunities to find mentors, collaborate with other stakeholders, share co-working spaces, educate themselves and find capital to grow and scale their businesses. Here’s some highlights of this year.

Alberta adopts an Investor Tax Credit – after years of watching our neighbors to the west reap the benefits of an investor tax credit, the government of Alberta announced our own 30% investor tax credit to spur investment into innovative companies that have the potential to diversify our economy, increase exports and add much needed jobs to our economy. The program has rocketed to a fast start with only $5 million of tax credits left in the 2017 budget ending in March of 2018. With another $60 million in credits available over the next two years, that equates to another $180 million of investment dollars for Alberta companies. Learn more.

The Rainforest is in full bloom – 18 months in, the Rainforest continues to gain momentum. The mission … to support Alberta’s entrepreneurial eco-system by creating an environment that means Albertans don’t have to move away to invent, prosper, and move their ideas forward. Learn more about the Rainforest and sign the Social Contract.

Creative Destruction Labs, Rockies (“CDL”) – launched its first cohort of 25 companies in the “Prime” stream. The Prime stream is industry agnostic, with startups tackling problems in healthcare, finance, energy, chemical, media, transportation, and agriculture sectors, amongst others. Technologies in the Prime stream include advanced engineering, electronics, blockchain, nanotech, neuroscience, and general IT applications. CDL has assembled a list of impressive advisors and partners to mentor the teams through the program. Learn more here.

Google’s DeepMind comes to Canada and sets up shop in Edmonton – DeepMind, in collaboration with the University of Alberta opens its first ever international AI research office in Edmonton. Known for its AI talent, the new office will continue to train the next generation of AI researchers and help keep the much needed AI talent right here in Alberta. DeepMind Edmonton.

RocketSpace is coming to Calgary – in 2017, RocketSpace, one of Silicon Valley’s most successful co-working campuses focused on scaling tech start-ups, announced their first campus in Canada and named the Edison as their home in Calgary. RocketSpace recognized that Calgary has everything that RocketSpace startups are looking for in a headquarter city. It is a city of solutions-first thinkers, engineers, and entrepreneurs — and we’re here to support them every step of the way. Their new state-of-the-art tech campus in Calgary will provide velocity — both speed and direction — to Canada’s top tech startups so they can scale up even faster. Learn more.

Alberta’s co-working trend continues to grow – Calgary and Edmonton continue to see new co-working spaces opening, serving all types of entrepreneurs and professionals looking for convenient and flexible office space to grow their businesses and network with peers. Check out Calgary’s Co-working spaces, Incubators and Accelerators and the Co-work Edmonton for space that fits your culture and budget.

Canada’s New $100-Million Procurement Program for Technology Startups –

I was pleased to be part of the $100 million Innovative Solutions Canada announcement in Ottawa on December 14.The New program has over $100 million dedicated to supporting the scale up and growth of Canada’s innovators and entrepreneurs by having the federal government act as a first customer. Twenty participating federal departments and agencies will set aside a portion of funding to support the creation of innovative solutions by Canadian small businesses.

Under the program, federal departments and agencies will fund up to $150,000 for a proof-of-concept study and $1-million to fund development of a prototype.

We often say that “first customer” goes a long way to validate a company’s products or services, making it easier to enter markets, both nationally and globally. We encourage all entrepreneurs to regularly check the program’s site at Innovation Solutions Canada to review contract opportunities and submit their proposed solutions.

BDC launches Women in Technology Fund – BDC wants to foster the creation of the next generation of millionaire Canadian women technology entrepreneurs. With $70 million to be invested over 5 years, it’s the largest venture capital fund in North America dedicated solely to investing in early stage Canadian women led technology companies across sectors. The fund will support women-led tech firms in equity at the seed stage, Series A stage and sometimes at the Series B stage, alongside accelerator partners, investors and other corporate venture partners, as part of a syndicate or as a lead investor. Learn more here.

No excuses entrepreneurs and investors – get out there and take advantage of the opportunities. 2018 looks to be a good year indeed!

It’s been a busy start to the fall here at SeedUps and we thought we’d share a few updates and news.

In October, Montreal was host to the NACO World Angel Investment Summit, where over 500 investors, partners and industry leaders from around the world gathered together to learn about emerging trends shaping Angel investment. The event marked my official appointment as the Chair of the Board of Directors of the National Angel Capital Organization and I am honoured to work alongside a strong and capable board and growing staff at NACO. We’ve broadened our mandate to welcome Canada’s Incubators and Accelerators into our organization as we expand our support for angels and early stage companies seeking growth capital. Victoria will host the Western Regional Summit February 21 – 23, so be sure to put it in your calendar now.

Earlier this month, I made a quick trip to Milano to attend an Italian government sponsored start-up event with 21 investors from around the globe. Upon returning from there, Yuri Navarro, NACO’s CEO and I headed to Ottawa to meet with key ministries to share our members’ concerns over the proposed tax reforms, particularly as they relate to the use of private corporations when investing in start-ups. Our meetings were a follow-up to our written response submitted on October 2nd. We believe our voices are being heard and await further clarification from Ottawa on how they intend to ensure these reforms do not adversely impact angel investment. Download a copy here.

Featured Company News

RallyEngine

Steve Hardy, RallyEngine’s President & VP Marketing shared recent developments with us last week, stating that the Company has signed a prominent diplomatic client, pitched one of the largest resort groups in the world and is now nearly confirmed as a 100 Resilient Cities official partner. RallyEngine is in market now for a Seed Round. Learn more.

RateSeer Technologies

Donna Tilden, RateSeer’s Founder & CEO has just returned from FinovateFall 2017 in NYC where she and Head of Business Development Brian Smith presented their Denoti financial services platform to an engaged audience. Watch presentation here.

New VCC to invest in Alberta start-ups

Crowd Capital has been approved as a Venture Capital Corporation by the Alberta Investor Tax Credit Program. Our micro-venture fund will invest in Alberta’s innovative early-stage companies led by extraordinary talent with big ideas and big markets. Learn more.

Save the Date

NACO’s efforts to increase collaboration between early-stage community members will be in full swing at our 2018 Western Regional Angel Summit in Victoria BC.

So, save the date – February 21 – 23, and join us for a packed agenda to highlight Victoria’s thriving tech scene. Registration will open soon.

The collaborative funding model emerges as best fit for entrepreneurs and investors

For the past three years, we’ve been at the forefront of advocating for change in the way Canada’s early stage companies access capital and engaged venture investors find investment. Credited as the technology that supported the “First Ordinary Investor” to take an online stake in a private company, the team at SeedUps has been encouraged by the innovation movement taking hold in Canada and the regulators’ efforts to expand capital formation for early stage companies.

We’ve also been engaging with other stakeholders in the funding arena, specifically the Angels and early stage Venture Capital firms (“VCs”) that supply much needed growth capital to our passionate entrepreneurs. We’ve continued to advocate that SeedUps is not a competitor, rather a technology-enabled resource to help them fund their chosen companies faster and more efficiently. Although quick to recognize and invest in disruptive technologies in their portfolios, they have been slow to embrace technology for their own financing processes.

We’re now two years down the road and much has changed. The securities regulators have implemented complicated “crowdfunding” rules that create confusion for both the company raising capital and the investors wanting to invest. Three different regulations and three different registrant models adopted by select provinces have resulted in much confusion and low adoption by the industry as a whole. These new regulations may even result in companies taking on funding from hundreds of new investors without realizing the post raise obligations of managing those investors or more importantly, the ongoing reporting requirements built into the new regulations. These two issues alone, may prevent a crowdfunded company from accessing their next round of capital. Not the intended outcome.

Watch the BDC Video

While the regulators seem to have missed the mark, the industry seems to be getting it right. I recently attended and spoke at Startupfest in Montreal and was encouraged to see participation from all players in the capital raising eco-system. Ryan Eakin, our peer at CircleUp says it best, “If you are supportive of helping entrepreneurs thrive, creating more opportunity for more small businesses across the country and spurring economic innovation, you want to bring all parties to the table. You just want to do it in a more transparent, open way, not a historical old boy’s network that has led to disproportionately fewer new ideas being funded.”

The SeedUps technology platform allows this to happen. Early stage private capital has traditionally been funded by a small group of high net worth individuals ready to take a risk. By using our technology, companies can access a broader group of individuals that may want to invest smaller amounts alongside these investors. Angels that want to fund a company, yet don’t have enough cheque writers at the right time, can present their companies to an engaged investor community to fill the round. VCs can find additional capital for their portfolio companies – all in an efficient, transparent manner.

For companies trying to access Angel or VC capital, SeedUps provides the tools to prepare and present their opportunities to this important source of funding. We can also direct companies to our partners like banks, online lending platforms and government funding programs for those that can support this type of financing. With over 700 companies applying for funding on SeedUps, we know that many of them are not ready to face these investors. As a result, we have developed an Investor Readiness Program (“IRP”) that helps these companies prepare to face investors that ask the tough questions. The result, an increased chance of a successful capital raise – a win-win for the investors and the entrepreneurs alike.

So, we’re leaving the Crowd behind us – for now. We’ll continue to advocate for positive change that makes it easier for companies to access capital and for investors to have the freedom to invest in companies they believe in. We even have a few ideas in the works. As of now, it’s simply our opinion that the crowdfunding rules implemented by the various securities regulators to date do not work. They are in fact, as some might say, Dead in the Water.

Canadians are known for being modest and risk averse. Could this explain why Canada equity crowdfunding appears to be relatively underdeveloped so far? We talked to some of the market leaders to discover how Canada equity crowdfunding is doing in the key areas that determine market traction: regulatory environment, platform activity, deal flow, user growth, and media coverage.

Fantastic progress has been made on the regulatory front, but there is still widespread frustration that the regulations governing Canada equity crowdfunding aren’t simpler. Canadian market participants look with envy at the simpler regimes found in the likes of the UK and New Zealand. The fact that regulations are imposed province-by-province is an additional complicating factor, and according to law firm Dentons, a Canadian national regulator is difficult to see, despite a united push from the industry.

Securities marketed to the public in Canada require either a prospectus or an exemption. A prospectus can take a month or more to prepare, needs to filed with the regulator, and carries with it the significant burdens of a full due diligence process. For startups and SMEs, preparing such a document represents an untenable upfront cost.

To avoid the need to create this heavy, lawyer-and-time-intensive document, exemptions exist for offers marketed exclusively to accredited investors, and friends, family and close business associates.

In addition, the offering memorandum exemption provides a somewhat lighter document – but liability issues have driven offering memorandums to expand to a size not too different from a full prospectus. An offering memorandum still requires an audit and is still very costly to prepare.

The major change in the Canada equity crowdfunding landscape is the “Crowdfunding Exemption” which came into effect in January 2016 in Ontario, Quebec, Saskatchewan, Nova Scotia, Manitoba and New Brunswick. This offers companies wishing to raise up to CA$1.5 million an even more streamlined offering document and is being seen as the start of the true spirit of equity crowdfunding. BC joined in this exemption in May of this year.

Startups/SMEs

Several platforms are targeting early stage/SME ventures and both accredited investors and retail investors. The two with the most traction are SeedUps (based out of Calgary, Alberta) which launched in early 2014, while Frontfundr (based out of Vancouver, British Columbia) launched in spring 2015.

In her blog post “Why isn’t Canada embracing [crowdfunding], SeedUps CEO Sandi Gilbert opined that culture is not the key barrier, “The space is very new in Canada – with SeedUps being the lone voice for early stage investment until recently. The Canadian public in general isn’t even aware that they can invest in deals online. So getting the word out is important.” Frontfundr CEO, Peter-Paul Van Hoeken echoed this in a recent Globe & Mail piece, “It’s a process to create a crowdfunding market… We don’t think the cultural difference is a primary factor.”

So far, not very much money has changed hands in Canada equity crowdfunding, but considerable platform activity, user growth and interest is indicative of much more to come.

Later stage ventures

The OCMX offers “institutional” crowdfunding for later stage ventures and has operated since 2009. InvestX launched a private equity platform late 2014 focused on Canadian and US investors. Some might say that what The OCMX is doing is more corporate finance or investment banking than “crowdfunding” often defined as small amounts raised from a large number of people online.

On the matter of culture, InvestX CEO Marcus New comments on one of the factors on slower Canadian adoption, “Entrepreneurship is not celebrated in Canada the way it is in other countries especially the US where there is an eco system that supports entrepreneurship.”

In terms of new portal entrants, NexusCrowd and Crowdmatrix are local operators which are setting up to launch, and the Israeli platform OurCrowd has also expanded its global presence to the Maple Leaf State.

Media attention

In a recent speech, Terri Kirk, CEO of Funding Portal revealed Canada has the 6th highest adoption of fintech in the world, but even so, 57% of Canadians are unaware of what “fintech” is. So there is some way to go.

Still, Canada equity crowdfunding has captured the attention of the mainstream media, with CNN, Bloomberg and Fox all featuring stories. As the level of deal flow accelerates, more media coverage in this new funding medium will follow.

The aforementioned National Crowdfunding Association of Canada annual conference in Toronto saw a packed house of over 440 delegates and dozens of speakers, sponsored by big names in the Canadian funding landscape. Events are taking place regionally as well, organised by the national association, and by the portals undertaking their own education efforts to drum up interest from investors and company founders. Clearly, interest in the space is healthy and accelerting.

In summary

Defining what is “equity crowdfunding” and what should be counted in the $ raised figures is a difficulty, and means market size estimates vary widely. Craig Asano, Executive Director of the National Crowdfunding Association of Canada, said “The challenge is the definition of what’s included (and what’s not) in the aggregate count. I think platforms/transactions that are openly raising funding under the equity crowdfunding banner should be counted.”

Another challenge is that much of the raises claimed by the various platforms take place offline. As private companies, there is no real method to verify the totals but they are well aware of the importance of building trust in the sector.

FundRazr is an established Canadian platform that utilizes rewards and corporate sponsorships rather than securities to raise capital for ventures. CEO Daryl Hatton believes “Investors are unaware of the option to invest in this class, wary of it given low levels of knowledge and understanding and our natural conservative nature.”

The good news is that Canadian culture – i.e. conservatism – does not appear to be killing Canada equity crowdfunding. And Canadians may be less risk-averse than we assume – after all, they have been pouring investment dollars into mining exploration for decades. If Canadians can use that same pioneer spirit to build a knowledge economy, we can expect it to result in new jobs and growth. Investors take note.

About the Authors

Bret Conkin is the Founder of CrowdfundSuite, a Crowd investing and Crowdfunding Consultancy. CrowdfundSuite provides platform development and other expert services to help organizations profit from the new Crowd Economy. Bret is an Ambassador to the National Crowdfunding Association of Canada. He has founded and collaborated on multiple tech start-ups including Canada’s first Crowdfunding platform Fundfindr launched in 2008.

Nathan Rose is the Director of Assemble Advisory, a consultancy for companies wishing to pursue investment crowdfunding campaigns. Assemble Advisory assists with picking the right platform, putting together offer content and financial models, allowing companies to raise money sooner.

SeedUps Canada is an online investment crowdfunding platform where ordinary individuals and sophisticated investors come together to discover, evaluate and invest in growing companies. Companies raise capital through a secure platform where they can pitch, attract and close investors. Investors execute investments online, and stay informed of investee companies’ activities. It’s a disruptive model that is changing the way individuals can invest, and companies find investment.

Become an investor

Companies on SeedUps take advantage of new capital raising rules allowing them to reach out to all investors, not just the usual suspects. By reaching out to their peers, founders can attract investors and validate their product or services at the same time. So now, you too, can invest in your favourite private company.

It’s simple and free for anyone to sign up. Once your investor profile is complete you’ll be able to access eligible campaigns where you will find videos and pitch decks, ask entrepreneurs and management questions, request further information and invest – all in a secure online environment.

Three tiers of investors

Generally, there are three types of individual investors that can invest on SeedUps. It’s simple and free for anyone to sign up. Simply answer a few questions to complete your investor profile and you’ll be able to access eligible campaigns, ask entrepreneurs and management questions, request further information and invest. Your ability to invest is driven by:

where you live

the type of investor you are

the type of offering, and

the amount that is suitable for you based on your investment portfolio and financial circumstances

Accredited Investors

Tom is an executive at a Fortune 1000 company. He earns over $200K a year ($300K with his spouse) or has at least $1M of financial assets. He’s invested in private companies before but is looking for dealflow. He has no investment limits.

Eligible Investors

Jane is a business analyst at a consulting firm. She earns at least $75K ($125K with her spouse) or has at least $400K of net assets. She wants to start investing in private companies. Her maximum investment ranges from $1,500 to an unlimited amount.

Ordinary Investors

Robert is a developer at a technology firm. He earns less than $75K per year and is new to investing.He’s passionate about technology and wants to start investing in companies he finds interesting. His maximum investment ranges from $1,500 to $10,000.

Moving investments on-line

There’s a new generation of investors that are embracing the private capital markets, feeling empowered by choosing their own investments. Technology has changed the way companies find capital. Companies can now save time and money by pitching their deal to an interested online audience where investors browse through engaging company deal rooms, watch videos, review customized investment documents and execute transactions online.

It’s like Dragons’ Den and E*TRADE combined.

Each company has a target and maximum raise. Your investment is not released until the raise has reached its target. At that time the money is sent to the company and you become an shareholder in the business. If the target raise is not met, your funds are returned to the account from which they were drawn.

Deal Review and Vetting

Companies profiled on SeedUps have been reviewed and vetted by Waverley Corporate Financial Services Ltd. Before a deal goes live, the company is subject to a due diligence process to validate the company, its management, directors and its business model. The company is required to submit financial forecasts that are reviewed to ensure they are a fair and reasonable reflection of the business as it currently stands, and that their forecasts are backed by reasonable thinking and assumptions.

You should carefully review the information provided in the company profile and consult a financial advisor with respect to your ability to withstand a loss of your investment. There are no guarantees that your investment will deliver returns.

What You Own

Typically, investors receive common shares issued directly by the company. These shares represent an ownership stake in the company. If the business is sold, you are entitled to a percentage of what is earned in the sale of the business. In addition, if there is a dividend, you receive your share of the distribution.

In other cases, investors may receive preferred shares, limited partnership units or convertible debt in the company. The rights of these investors will differ from above, so be sure to carefully review the offering documents presented in the business profile. Be sure to read the offering documents to understand the terms of your investment and consult your personal advisor if you have any questions.

Ongoing Communications

You are investing in private companies that, in most cases, do not have an obligation to publish financial statements or provide quarterly updates. These companies do understand the importance of regular communications and our technology makes it easy to get messages out to their shareholders. In any event, we send regular updates to our investor base and we’ll be sure to keep you up to date with the information we have on the activities of the companies that successfully raise capital on SeedUps.

Why Invest in Companies on SeedUps

The SeedUps investor community invests for a number of reasons. Typically, they want to support a business or industry they are interested in, or they want to invest in a management team that has a track record of success. They understand the risks and rewards of investing in private companies and want to put a small portion of their investment portfolio into companies they believe in. Our registered users include first time investors, angels and early stage venture funds.

On SeedUps, you can invest in a diverse variety of industry sectors and select a company that resonates with you. It’s easy to browse profiled companies and make an investment online. The platform guides you through the investment process, seamlessly and efficiently.

Investing in Private Companies is Risky

Investing in private businesses is risky, but the returns are potentially high if you diversify and invest in companies you understand and interest you. When you invest in companies on SeedUps your risks include illiquidity, lack of dividends, loss of investment and dilution. You should only invest in these businesses as part of a diversified portfolio. Investment opportunities on SeedUps are suitable only to investors who are qualified and suitable to purchase the securities and who are familiar with and willing to accept the high risk associated with private investments.

Investors should implement a diversification strategy that involves spreading your money across multiple investments. There are no guarantees that your investment will deliver returns. If the company goes out of business, your shares will be worth nothing.

The impact of investment crowdfunding

Developments in technology and regulation mean that now, SeedUps can offer a variety of investments for small investors – both equity and debt. We provide the missing link that connects companies to an untapped groundswell of support — as well as a huge pool of capital held in private hands. We’re leading the charge in Canada and welcome you aboard! Register now at SeedUps.ca

This communication is for information purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy any financial product. Securities offered through Waverley Corporate Financial Services Ltd., an Exempt Market Dealer. Investment opportunities on SeedUps Canada are suitable only to investors who are qualified to purchase the securities and who are familiar with and willing to accept the high risk associated with private investments. You will have to complete and sign additional documents to determine your suitability to make an investment.

There’s been much press about the new capital raising rules for Canada’s early stage companies. As Canada’s first on-line platform to facilitate a private company investment from an “Ordinary Investor“, we’ve waited a long time to see these new rules come into effect. Today, companies looking to raise growth capital can reach out to a broader audience by presenting their deals on-line and attracting investment from Canadians that, until now, didn’t have access to private company investment opportunities.

Don McDonald, CEO Waverley

So now, we’re hitting the road on our “Be the Dragon Tour” to introduce this next generation of private capital investing to investors, both old and new. Don McDonald, CEO of Waverley, the EMD that handles securities related activities on SeedUps states, “Investors want to learn more about this next generation of investing. Angels and early stage funds are curious about using SeedUps to fill out financing rounds for their portfolio companies and first time investors want answers about the risks and rewards of investing in private companies. This road show will help answer those questions”.

The tour launches in Vancouver on February 11th with stops in Calgary on the 17th and Toronto on March 2nd. The Toronto stop corresponds with #CCS2016, the 2nd Annual Canadian Crowdfunding Summit where SeedUps is a Diamond Sponsor. Participants at the “Be the Dragon” tour events will learn how on-line platforms are transforming the private capital markets, hear from companies raising capital and enjoy networking with investors from all walks of life.

This communication is for information purposes only and should notbe regarded as an offer to sell or as a solicitation of an offer to buy any financial product. Securities offered through Waverley Corporate Financial Services Ltd., an Exempt Market Dealer. Investment opportunities on SeedUps Canada are suitable only to investors who are qualified to purchase the securities and who are familiar with and willing to accept the high risk associated with private investments. You will have to complete and sign additional documents to determine your suitability to make an investment.

Calgary — ATB Financial and SeedUps Canada are partnering to help educate small businesses and investors about a new phenomenon: equity crowd funding. Formed in 2014, Calgary-based SeedUps, with its exempt market dealer partner Waverley Corporate Financial Services, is the first online equity crowd funding platform in Canada, allowing early-stage companies an opportunity to raise capital from a broad range of investors. Through equity crowd funding, investors become part owners of the businesses they support.

“We call it being an owner, not a donor,” says Sandi Gilbert, founder & CEO of SeedUps. “Crowd funding has been around for a long time. I grew up on a farm and when we needed to build a new barn, we just got the neighbourhood together and they came and helped us build the barn. At SeedUps, we’re using technology to give companies a broader reach so they don’t have to go door to door to raise capital.”

ATB—the largest Alberta-based financial institution—and SeedUps will work together to build and distribute educational materials for both early-stage companies and investors so they can learn how to participate and benefit from equity crowd funding.

“We’re working hard to be the bank supporting entrepreneurs in Alberta,” says Sean Ballard, ATB’s director of innovation. “We want to help show entrepreneurs and investors how to raise and use capital, where equity crowd funding fits in and how to grow. It’s a great way to serve our customers better.”

Jump On was the first company to be profiled on SeedUps and the first to generate an investment. Based in Calgary, Jump On books unused charter aircraft and offers low airfare to destinations across North America. So far, Jump On has raised $100,000 in capital through SeedUps investments that will go towards development of new computer software. It was capital the company may not have otherwise been able to raise.

“It was an opportunity to put our name in front of a new group of individuals that was beyond our reach,” says Roger Jewett, Jump On’s founder and CEO. “We were looking for a simple way to give our customers a way to become shareholders and, on the flip side, we wanted our shareholders to become customers. It just seemed to be the perfect fit. It’s been phenomenal.”

Equity crowd funding is also a way for non-accredited investors to participate in high risk/high reward venture capital.

“Typically in North America, investing in private companies has been restricted to accredited investors or, in a word, millionaires,” says Gilbert. “Demographically in Canada, that’s a very small amount of people, maybe three or four per cent of the population. But what about the people who make $150,000 a year or who have $400,000 in their investment portfolio? That’s a large group and we’re opening up new investment opportunities for them.”

The Canadian Securities Administrators have released the final regulations for the new Offering Memorandum (“OM”) Exemption, quasi-harmonized in six jurisdictions in Canada. Ontario will join the rest of Canada and open up private capital investment to “non-accredited” investors in January of 2016, while Alberta, Saskatchewan, Quebec, New Brunswick and Nova Scotia will enforce the new rules effective May 2016.

The new regulations are designed to provide further investor protection when purchasing securities in private issuers. The key changes fall into three categories:

Ongoing disclosure – non-reporting issuers will be required to, among other measures, provide investors with audited annual financial statements and an annual notice describing how the proceeds raised under the OM were used.

Disclosure at time of offering– any marketing materials will be required to be incorporated by reference in the offering memorandum so that they are subject to the same liability as the disclosure provided in the offering memorandum in the event of a misrepresentation. This would include videos, pitch decks and executive summaries companies use when marketing their offering.

Investor limits – individual investors relying on the offering memorandum exemption will be subject to annual investment limits – $10,000 for an ordinary investor and $30,000 for an eligible investor. If the securities are sold through a dealer, all investments are subject to suitability, but the annual limit for an eligible investor increases to $100,000 per year, subject to suitability.

Companies will be encouraged to be able to reach the large Ontario investor marketplace, but the regulations are certainly complex and will take a while to digest. The 166 page documentcontains many more details – some of which pertain to certain jurisdictions. I’m glad the regulations don’t come into effect for a couple of months … it will take us that long to figure them all out!

In short – it is the ASC’s answer to the recent Start-up Crowdfunding Exemption recently issued by six other jurisdictions – but better. I haven’t dug deep into the detail just yet, but from my first initial review, I have to say I like it. It has a lot of common sense rules to it – a $1 million capital raise, common sense disclosure, a $5,000 maximum investment from an ordinary investor and the ability to conduct concurrent raises, all through a registrant.

For those of you that remember my older post “The Trouble with the OSC’s Crowd” the ASC has solved many of the issues I have with the OSC’s yet to be implemented version. And, better yet, they don’t even call it a Crowdfunding Exemption – it is simply a Start-up Business Exemption that is directed principally at small and very early-stage businesses and is designed to allow them to raise a defined amount of money in a more cost effective way while still providing appropriate investor protection. It is after all, another tool in a company’s capital raising toolbox.

Our team is currently reviewing the proposed exemption in detail and will work with other stakeholders in providing comment. For now, we are pleased to see this initiative from the ASC. Although they stand on their own (with the Nunavut Securities Office), they have provided some solutions for multi-jurisdictional offerings. Stay tuned – we’ll provide more comments soon.